By: Russell O Sullivan
The talk around very many financial services products gets surprisingly and perhaps unnecessarily complicated when, all along the concepts behind the vast majority of these products is really quite simple and straightforward. Take Mortgage Life Insurance, for example. Despite the potentially off-putting title, it is simply an insurance intended to ensure that your mortgage is fully paid off in the event that you died before you had had the opportunity to pay it off.
Mortgage protection life insurance has been around for a long time, therefore, to offer security and peace of mind to those you wouldn’t want to have to worry about paying off the mortgage if you died.
As an aside, do not confuse mortgage payment protection insurance (MPPI) with mortgage protection life insurance. The two are very different, with the former protecting your actual monthly mortgage repayments in the event of you becoming unable to work due to involuntary unemployment; after having an accident; or due to long term illness. MPPI enables you to keep repaying your mortgage until you are back on your feet or find alternative employment.
Anyway, back to mortgage life insurance… many mortgage lenders themselves have traditionally insisted on borrowers taking out mortgage life protection to cover their own risk against the mortgaging remaining unpaid if the mortgagee died before the end of the mortgage term.
Those more traditional methods of mortgage life insurance tended to be decreasing term life assurance arrangements, in which the potential insurance payout sum decreased over the term of the insurance, in line with the decreasing mortgage balance owing. By the end of the mortgage term, therefore, the insurance payout has reduced to zero.
A guaranteed payout
Given recent changes in the mortgage market and the increasing competitiveness of straight forward term life assurance, however, it could make better sense to opt for a fixed term life insurance equal to the mortgage amount borrowed. That way, if you die before the expiry of the insurance term, the mortgage can be repaid from the proceeds and your beneficiaries will likely enjoy a lump sum payment of any remaining balance.
This type of cover offers a guaranteed policy pay out amount and guaranteed premium payments throughout the term of the insurance, which can be agreed at 30, 25, 20, or any number of years, at the outset.
When considering the ways of ensuring that your mortgage is repaid if you die before its full term, remember that:
* The traditional method is to go for a decreasing life assurance
* Current premium rates, however, make a standard fixed term life assurance policy in the same amount as the initial mortgage another option to consider
* As when making any major or important purchases, ensure you shop around for your cover in order to get the right level of benefits at a realistic price. The life assurance business is an extremely competitive one, so don’t just apply for the first policy that catches your eye – make sure you do your research first.
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Find out more about Mortgage Life Insurance at http://www.confused.com/life-insurance The talk around very many financial services products gets surprisingly and perhaps unnecessarily complicated when, all along the concepts behind the vast majority of these products is really quite simple and straightforward. Take Mortgage Life Insurance, for example. Despite the potentially off-putting title, it is simply an insurance intended to ensure that your mortgage is fully paid off in the event that you died before you had had the opportunity to pay it off.
Mortgage protection life insurance has been around for a long time, therefore, to offer security and peace of mind to those you wouldn’t want to have to worry about paying off the mortgage if you died.
As an aside, do not confuse mortgage payment protection insurance (MPPI) with mortgage protection life insurance. The two are very different, with the former protecting your actual monthly mortgage repayments in the event of you becoming unable to work due to involuntary unemployment; after having an accident; or due to long term illness. MPPI enables you to keep repaying your mortgage until you are back on your feet or find alternative employment.
Anyway, back to mortgage life insurance… many mortgage lenders themselves have traditionally insisted on borrowers taking out mortgage life protection to cover their own risk against the mortgaging remaining unpaid if the mortgagee died before the end of the mortgage term.
Those more traditional methods of mortgage life insurance tended to be decreasing term life assurance arrangements, in which the potential insurance payout sum decreased over the term of the insurance, in line with the decreasing mortgage balance owing. By the end of the mortgage term, therefore, the insurance payout has reduced to zero.
A guaranteed payout
Given recent changes in the mortgage market and the increasing competitiveness of straight forward term life assurance, however, it could make better sense to opt for a fixed term life insurance equal to the mortgage amount borrowed. That way, if you die before the expiry of the insurance term, the mortgage can be repaid from the proceeds and your beneficiaries will likely enjoy a lump sum payment of any remaining balance.
This type of cover offers a guaranteed policy pay out amount and guaranteed premium payments throughout the term of the insurance, which can be agreed at 30, 25, 20, or any number of years, at the outset.
When considering the ways of ensuring that your mortgage is repaid if you die before its full term, remember that:
* The traditional method is to go for a decreasing life assurance
* Current premium rates, however, make a standard fixed term life assurance policy in the same amount as the initial mortgage another option to consider
* As when making any major or important purchases, ensure you shop around for your cover in order to get the right level of benefits at a realistic price. The life assurance business is an extremely competitive one, so don’t just apply for the first policy that catches your eye – make sure you do your research first.
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Find out more about Mortgage Life Insurance at http://www.confused.com/life-insurance
